Achieving Sustainable Environment in Sub-Saharan African Countries: The Role of Remittances and the Moderating Influence of Financial Development

Abstract

Driven by the role of remittances in sub-Saharan African (SSA) nations, this study scrutinizes the effect of remittances on environmental sustainability and the moderating role of financial development, using a robust measure of environmental quality. Using a sample of 27 SSA countries between 1991 and 2022, the study found the presence of cross-sectional dependency and slope heterogeneity. Based on these, the study utilized the second-generation estimation techniques. The empirical findings reveal that remittances, financial development, and economic growth accelerate environmental degradation, while urbanization reduces environmental damage in the long run. The result further shows that financial development moderates the adverse effect of remittances on the environment. Moreover, a unidirectional causal relationship exists from remittances to the environment, and from financial development to the environment. Finally, policy prescriptions for environmental sustainability in SSA were offered based on the study's results.